WORLD TRADE  
ORGANIZATION  TN/MA/W/72 
15 May 2006 
 (06-2364) 
Negotiating Group on Market Access Original:   English 
  
 
MARKET ACCESS FOR NON-AGRICULTURAL PRODUCTS 
 
Tariff Liberalization in the Chemicals Sector
 
 
Communication from Canada, Norway, Singapore, Switzerland  
the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu and the United States 
 
 The following communication, dated 12 May 2006, is being distributed at the request of the 
delegations of Canada, Norway, Singapore, Switzer land, the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu and the United States.  
____________ 
 
I. INTRODUCTION 
1.   As proposed in the previous communication of 4 July 2005 (ref. TN/MA/W/58), tariff 
elimination in the chemicals sector is an importa nt component of a successful outcome of the Doha 
Development Agenda.  The participation of Member s who produce and trade chemicals is important 
not only to advance the liberalization of global trad e, but also to promote economic development.  
This initiative would produce subs tantial benefits for both deve loped and developing countries, 
increasing the competitiveness of not only the chemicals sector, but also many downstream industries. According to UNCTAD, developing countries’ share of trade in world chemicals exports grew from 
16.5% in 1990 to 20.7% in 2000.
1  During the same period, global chemicals trade nearly doubled 
from $296 billion in 1990 to $566 billion in 2000.    
2.  The global chemical industry is essential 
to a broad range of manufacturing and agricultural industries.  High tariffs on chemicals translate into costs that  significantly raise the 
prices of intermediate and finished goods.  
Chemicals also comprise a significant percentage 
of the value of goods exported by developing countries.  Liberalization in this sector would continue to ensure that these inputs can be supplied at a low price globally, thus enabling other industry sectors to diversify and produce 
finished goods at lower costs.   
 
                                                     
 
1 United Nations Conference on Trade and Development, Trade and Development Board, Commission 
on Trade in Goods and Services, and Commodities: Expe rt Meeting on New and Dynamic Sectors of World 
Trade, Geneva, 7 February 2005, “Strengthening participation of developing countries in dynamic and new 
sectors of world trade: Trends, issues and policies”, Document TD/COM.1/EM.26/2; 15 December 2004.   Chemicals Value Added in Selected Industries 
  Carpets and Rugs 47% 
  Footwear 35% 
  Agriculture 30% 
  Clothing 28% 
  Medical Equipment 28% 
  Office Furniture 21% 
  Motor Vehicles 16% 
  Jewellery 15% 
  Computers 12% TN/MA/W/72 
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  II. CRITICAL MASS 
3.  In the Uruguay Round, a group of WTO Members agreed to harmonize tariffs on a broad 
range of chemical goods to promote liberalization in this sector and to develop a more predictable and 
transparent global tariff structure for a growing industry. The result was the Chemical Tariff 
Harmonization Agreement (CTHA), which led to a substantial reduction and harmonization of 
chemical tariffs in the signatory countries.  Partic ipants in the Agreement agreed to harmonize tariffs 
at three levels: zero, 5.5 percent, and 6.5 percen t.  Basic organic and inorganic chemicals were 
harmonized at 5.5 percent, with more highly processed goods such as cosmetics and plastics 
harmonized at 6.5 percent.  Additionally, tari ffs on pharmaceutical products in Chapter 30 and 
primary petrochemicals in Chapter 29 were elim inated.  Since the Uruguay Round, many new 
Members have chosen to participate in the CTHA as part of their accession to the WTO. There are 
currently nearly thirty WTO Memb ers participating in the CTHA. 
 4. A chemical sectoral initiative in the Doha Development Round should build on the success of 
the CTHA and include WTO Members that are key traders as well as producers that have the potential 
to impact international markets through trade. Criti cal mass will be attained when sufficient Members 
agree to participate in this initia tive such that their combined tota l trade reaches a threshold to be 
determined by Members.  Recognizing the importan ce of participation by key producers, and the 
limitations of cross-national pr oduction data, Members should work with their own industries to 
identify key producers, which will then  be targeted for participation. 
 III. PRODUCT COVERAGE 
5. A chemical sectoral initiative should be as co mprehensive as possible.  Using the model of 
the CTHA, product coverage should include HS chapters 28-39. These chapters cover products 
including inorganic and organic chemicals, fertil izers and pesticides, soaps and cosmetics, and 
pharmaceuticals and plastics.  Japan has prop osed the addition of semi-processed rubber 
(HS 4002-4008) to the product covera ge.  Additional products of inte rest to participating Members 
may be added to the list for consideration. The ultimate decision on product coverage rests with the 
participants in the agreement.  
   CTHA Product Coverage 
  Ch. 28  Inorganic chemicals, organic or inorganic compounds of precious metals such as: chlorine,
flourine, sulfur, alkaline, hydrogen chloride 
  Ch. 29* Organic chemicals such as: ethane, butane, propane, octane 
  Ch. 30*  Pharmaceutical products 
  Ch. 31  Fertilizers 
  Ch. 32  Tanning or dyeing extracts 
  Ch. 33  Essential oils 
  Ch. 34  Soap, organic surfacing agents, lubricati ng preparations, artificial and prepared waxes, candles
  Ch. 35  Albuminoidal substances; modified starches; glues; enzymes such as: adhesives 
  Ch. 36  Explosives 
  Ch. 37  Photographic or cinematographic goods 
  Ch. 38  Miscellaneous chemical products such as: pine oil, herbicides, insecticides 
  Ch. 39  Plastics and articles thereof such as: resins and polymers  TN/MA/W/72 
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  *Please Note :  Four subheadings from Chapter 29 (2936; 2937; 2939 and 2941) and all of 
Chapter 30 are also being discussed as proposed pr oduct coverage in another sectoral initiative on 
pharmaceuticals and medical devices. Depending on fina l participation in each sectoral, clarification 
of the appropriate modality for countries partic ipating in both initiatives may be required. 
 IV. SCOPE AND PACE OF TARIFF ELIMINATION 
6. A chemical sectoral initiative in the Doha  Round should build on the success of the CTHA 
such that all participants eliminate bound tariffs on chemical products immediately.  Such tariff 
elimination would begin when a critical mass of WTO Members commit to a program of tariff elimination.  Developing countries may be afforded special and differential treatment for their process 
of elimination as outlined below. 
 
V. SPECIAL AND DIFFERENTIAL TREATMENT 
7. Additional tariff elimination options, based on current CTHA participation, may be employed 
to account for the needs of developing countries.  These options may be tailored with longer 
implementation periods for certain highly sensitiv e products to form a special and differential 
treatment package unique to each developing countr y. Reduction and staging commitments under this 
sectoral initiative should be no less ambitious than those brought about by the formula modality under the Doha Round.   8. Developing Members Participating in the CT HA.  Developing Members already participating 
in the CTHA may elect to eliminate chemical dutie s based on the following two-step process:  First, 
each Member must fulfil CTHA harmonization according to its previously negotiated staging schedule and CTHA end rates (see table A below).  Second, Members must eliminate bound tariffs 
over 5 years in 5 equal, annual instalments after th e previously negotiated end rate is attained.  
 
9. Developing Members Not Participating in the CTHA.  Developing Members that do not 
currently participate in the CTHA may elect to eliminate chemical duties according to a staging 
schedule no less ambitious than what was agreed to  by the CTHA (as reflected in table B below).  
 10. We welcome additional proposals for special and differential treatment and will consider 
them in the context  of discussions on overall participation and product coverage in the sector.  
 
 
 
 
 
   
 
VI. IMPLEMENTATION 
 
11. The results of this negotiati on will be incorporated into each participating Member’s schedule 
of commitments. 
__________   Table A.  CTHA End Rates 
 Chapter Subheading End Rate 
 Chapter 28    All 5.50% 
 Chapter 29    2901-2902 0.00% 
 Chapter 29    2903-2915 5.50% 
 Chapter 29    2916-2942 6.50% 
 Chapter 30   All 0.00% 
 Chapter 33-39   All 6.50%  Table B.  CTHA Staging Schedule 
 
Tariff Rate 
 Implementation 
Period 
  >25%   15-year staging 
  >10% and <25%   10-year staging 
  <10%   5-year staging